Oil and gas contractor Cuadrilla Resources has stated that it may decide to either float an initial public offer (IPO) or raise funds from other sources to support its future expansion. However, this will happen only if the firm succeeds in shale gas exploration.
Cuadrilla is currently undertaking preparatory work in Lancashire for shale gas exploration. The company has already announced that it intends to start fracking in 2017 in the UK’s first four horizontal wells as it has already been given the go-ahead by the Government.
Cuadrilla Chief Executive Francis Egan revealed that the company is supported by private equity. Hence, it would either approach the equity or debt market to spur its future expansion plans.
The work was funded in 2013 by Centrica after the energy and services firm acquired a 25 per cent stake in a Lancashire licence area owned by Cuadrilla.
Egan informed a select committee in the House of Lords that investors have no issues investing in four horizontal wells. However, the real test will begin when the shale gas production site increases to 15 to 20 wells.
A Cuadrilla spokesperson reiterated that the company did not have any plans at the moment to evaluate or launch an IPO. However, Egan stated that if extraction of shale gas turned out to be commercially successful, Cuadrilla would start looking at different funding options. It will take a year after fracking begins to assess whether the production is successful.
Egan went on to explain that the firm would look at both equity and debt markets and also at the current shareholders of the company. He confirmed that the company is completely funded for its existing shale gas exploration and production plans.
In 2015, Cuadrilla had virtually no revenue generation, and the firm reported a loss of £14.3 million. However, it was successful in raising approximately $4 million from its existing shareholders.